GE announced that itâ€™s planning to go big in solar panel manufacturing and will build the largest solar panel factory in the U.S., with an annual capacity of 400 megawatts of production of thin-film solar when it is up and running in 2013.Â Â GE will spend $600 million on the project.
Itâ€™s a head on challenge to First Solar (FSLR), the largest maker solar panels made from thin layers of cadmium telluride. GE is going to manufacture the panels with the same composition of materials.
â€œOver the last decade, through technology investment, GE has become one of the worldâ€™s major wind turbine manufacturers, and our investment in high-tech solar products will help us continue to grow our position in the renewable energy industry,â€ Victor Abate, vice president of GEâ€™s renewable energy business, said in a press release.
To jump start its efforts, GE completed its acquisition of PrimeStar Solar of Arvada, Colo. The purchase price was not disclosed, but is included in the overall $600 million figure, Abate explained in a phone interview from Colorado. GE has held an equity stake in PrimeStar since 2007,Â and a majority stake since 2008. The two companies have been working to boost the efficiency of the cad-tel solar panels.
â€œThe biggest challenge for solar is the cost of energy,â€ Abate said. â€œFor every point you can move [higher] in efficiency, you reduce the cost of the system by 10%.â€ Thus itâ€™s important news that PrimeStar produced a CdTe thin-film panel with a record high efficiency of 12.8%, a measure of the amount of sunlight hitting the panel that is turned into electricity. Typically efficiencies of such panels are in the 11% range; First Solar has had a goal of reaching 12.5% efficiency by next year.
The attraction of cadmium telluride thin-film solar is its lower cost. It does not use any silicon. First Solarâ€™s production costs are around 80 cents a watt; traditional silicon solar panels are being produced by Chinese manufacturer for about $1.20 a watt.Â GEâ€™s Abate wouldnâ€™tÂ say what the companyâ€™s production cost goal will be. He does expect the efficiency of its solar panels to be even higher than 12.8% by the time the factory opens in 2013, noting that as efficiencies increase, systemwide costs drop.
Some industry watchers are not as sanguine about GEâ€™s move. John Segrich, portfolio manager of the Gabelli SRI Green Fund, is currently mostly short the solar cell and panel makers since there is so much new capacity, which GEâ€™s move will exacerbate. GEâ€™s announcement Thurday is â€œjust a good example of another big player coming into the market and that means there is more competition and therefore more pricing pressure over time,â€ Segrich said.
GE said the worldwide demand for solar products is expected to grow by 75 gigawatts over the next five years. With its latest investment, GE is hoping to benefit from the growth in the industry. Abate said GE already has 100 megawattsâ€™ worth of orders from utility-scale solar customers in the U.S.
Besides First Solar, GE will also be competing with Abound Solar of Loveland, Colo., which makes cadmium telluride thin-film solar and received a $400 million loan guarantee from the U.S. Department of Energy in December. Abound Solar is building a solar panel factory in Tipton, Indiana with a capacity of 640 megawatts â€“even larger than GEâ€™s planned factory; it is scheduled to be complete in 2014. Abound Solar CEO Tom Tiller told me in December that his companyâ€™s production costs were between $1.25 and $1.50 a watt, but were declining rapidly.
Abate acknowledged that both First Solar and Chinese cyrstalline silicon solar producers are formidable competitors. Chinese companies are benefiting from government support and are gaining market share in the U.S. due to low prices. But, said Abate: â€œOur view is that our technology leadership is going to be key.â€